SECRETARY EVANS: Mr. President, thanks for joining us. I've got
to tell you, you just walked in as Truett Cathy, who owns Chick-fil-A,
who started the year we were born, in 1946, and it stood the test of
time. He just told a great story about why he didn't go public, and
that is because he felt like that if the company didn't do well, that
anybody that invested in him, he'd feel a responsibility of bailing
them out. So he didn't want to take on a lot of shareholders, in case
the company didn't do well. He said, look, I'm going to do this on my
own. But that's a very novel kind of concept, that you -- you know, if
a company didn't do well, you would bail out your shareholders. So
Truett, thank you for the story.

Mr. President, thank you for joining us. We've had a very good
discussion about corporate responsibility. We've got a cross section
here of not only CEOs and corporate leaders, but small investors, small
business owners, ranchers and homemakers.

I'd like to call on Dick Holthaus down here on my right, because
Dick represents the small investors all across America. He is the head
of the National Association of Investor Clubs, so Dick has a feel for
what the small investors are saying about the issues of the last nine,
ten months. So, Dick, why don't you take this chance to tell the
President what's on their mind.

MR. HOLTHAUS: Thank you very much. And it is good news, so that's
good.

As the Secretary said, I represent the NAIC, which is the National
Association of Investors Corporation. Just a couple of dimensions on
that. Three to 400,000 members in the U.S., and I was surprised today
because I didn't know they were coming -- would the members in here who
came up to me sort of hold up their hands, that are members of the
NAIC.

THE PRESIDENT: Great.

MR. HOLTHAUS: It's a small organization; 82 full-time staff, but
2,000 volunteers around the country. Together, the equity investments
of the members both in the clubs and their individual portfolios total
about $125 billion. So when you put it all together, it's a fairly
large sample.

Importantly, these people -- and people you see around the room,
including myself -- each month put a fixed amount of money into the
club. And if you add all that up across, it's roughly $200 million a
month that's flowing into the system. The members are voting, if you
will, on corporate responsibility with how they're putting -- you know,
their investment dollars and what they're doing. Over the past several
months, up until this last month, we tracked the transactions. So we
look at every 10 transactions that the clubs, a large sample of the
clubs do. If the -- we look at how many transactions are buys and how
many are sells.

Up until this last month, it was running eight sells for every two
buys. And in the last month -- and I think this has to do with
corporate responsibility, it has to do with a number of financial
factors in the market -- it's now running zero sells, 10 buys. So the
individuals at least represented by our organization, are back in the
clubs. And I think those around the room would -- the ones I chatted
with -- are doing it too.

Anecdotally, clubs that have limits on how much each member can put
in every month have -- have released those limits so that they can add
more during this time. So, you know, I think that's good news. I
think one of the differentiating factors of how the individual looks at
the market versus the institutions are, we don't think in terms of
nanoseconds, we don't think in terms of days, we don't think in terms
of months or even quarters. Everybody looks at a time frame that's
about five years, and that gives you a whole lot different -- different
decision.

So I think at the bottom of all this, I mean, we are an educational
organization and it's key that the citizens of the U.S., the investors
of the U.S., as Dick Grasso said, the 85 million people who are in the
market, we need the education to be spread as widely as possible.

Thank you.

THE PRESIDENT: Dick, thank you. This is -- it's really a fine
seminar because the quality of the people are great. Wait until you
see who's here when you go to lunch. It's really impressed. And this
is a topic that is a vital topic for the country, and that's trust.
You know, how do we make sure people can trust what they see, can
believe what they hear, can understand -- understand that they're being
told the truth when it comes to numbers and make sure the fine print,
you know, is fully exposed.

I want to thank Dick from the New York Stock Exchange for helping
set the tone for policing themselves. You know, the government can
only do so much. And I can assure you we're going to hold people
accountable. If they lie, cheat or steal, they're going to be
prosecuted, they just are.

But there's a lot others need to do as well, and the New York Stock
Exchange set a very good example, starting a process that will regain
the trust of -- you know, of just the average citizen in America.
That's what we've got to do, and that's what we've got to hit head on.

As the man who heads Albertsons in the previous seminar said, CEOs
need to get out front. They don't need to hide during this period of
time; they need to be out front. He's starting tomorrow by signing a
letter that will verify the truth and verify reality.

But I want to thank you all for coming. I can assure you that,
even though I won't be sitting through every single moment of the
seminars, nor will the Vice President, we will look at the summaries
and we will look at any ideas that come out, as to determine whether or
not there is more government can do. In the meantime, I'm going to be
calling upon the leaders in our communities all across our communities
to do their job as responsible citizens.

So thanks for coming. This is an important day, and I think for
those who are watching on C-SPAN, I think they are going to find that
there's a lot of Americans like themselves who are deeply concerned
about the future of this country. And I think you are going to find
that a lot of us are very optimistic about the future of the country,
because we are a fundamentally strong nation, full of great people.

Welcome to central Texas.

SECRETARY EVANS: Thank you, Mr. President.

Let me turn your attention to Harry Alford on your left. Harry is
the Chairman of the National Black Chamber of Commerce, and he
absolutely understands that capitalism will not work without a strong
sense of values and morality. And so, Harry, why don't you tell the
President what's on your mind.

MR. ALFORD: Very proud to be here, Mr. President. When I went to
officer candidate school in Fort Benning, Georgia, the two essentials
of leadership was honor and integrity. And the three evils, lie, cheat
and steal. You do one, you're going to do the other two also. And to
lie, cheat and steal means you're not going to accomplish your mission,
you're not going to take that hill, and you're going to get a lot of
good Americans hurt or destroyed in the process.

So it really upsets me, enrages me to see Fortune -- corporate
officers of Fortune 100 companies get subpoenaed to Capitol Hill and
plead the Fifth Amendment, as if they're Bugsy Siegel or Al Capone.
And I have a lot of confidence that this little bump in the road,
history will show that your strong leadership got us through this
quickly and kept our economic lifeblood flowing.

THE PRESIDENT: I can assure you of one thing. If somebody broke
the law, they're going to be held accountable. Dick came and I think
Ken, both came to the speech I gave in New York. I was telling this
story to one of the other seminars. And our business schools don't
want to teach right from wrong anymore. They're afraid of taking a
position, evidently. Michael probably knows more about that than I
do.

But, anyway, in my speech, I said, business schools need to take a
stand and teach their youngsters right from wrong. Just as you
mention, Harry, there are some values that are true.

And I was working a rope line. A professor said, well, thanks for
saying that; as a business school professor, we needed to hear that.
And a laboring man standing next to him said, yes, if you really want
to teach people right from wrong, put those who did wrong in handcuffs,
that's the best ethics lesson that government can do. And we're going
to, we're going to.

SECRETARY EVANS: Talking about somebody who is teaching people the
difference between right and wrong, Ron James, who runs Center for
Ethical Business. And so, Ron, I mean, to you, how are you teaching the
difference between right and wrong and running an ethical company?

MR. JAMES: Thank you, Mr. Secretary.

Mr. President, we really believe that business leaders do two
things very well. They're concerned about all of their stakeholders,
that's their customers, their employees. Yes, the shareholders, but
the suppliers as well as their communities. And they balance short-
and long-term tradeoffs. They really create value for the shareholder
over the long term by serving all of these stakeholders. Reports and
studies would show that companies that practice this literally grow
revenues four times as fast. They grow the work force eight times as
fast as companies who don't, and they grow stock prices 12 times as
fast. So it's not about doing either/or -- you can do both. You can
create an ethical environment that serves multiple stakeholders, but
you can ensure that you're creating value for the shareholder.

It really boils down to leadership. Leadership has got to walk the
talk, they've got to set the tone. Leadership has got to instill the
right mission and vision and values for the organization and then
people fall in line and we can see the real benefits.

MR. JAMES: We partner with a couple of academic institutions. The
Carlson School of Management at the University of Minnesota and St.
Thomas's College of Business.

THE PRESIDENT: But is there a trend in these business schools,
like this person pointed out to me, that there's kind of a --

MR. JAMES: Yes. At these two schools, ethics is a core part of
the curriculum and it's literally not just taught as a stand-alone
course, it's actually ingrained in the various disciplines -- whether
it's marketing or finance or manufacturing -- ethical dilemmas are
surfaced so that the students have got to wrestle with those.

And one of the interesting things we're seeing is that students are
raising questions about not just what's my next career move going to
be, but what kind of organization am I signing up to work for. Does
its values and what it stands for line up with who I really am?

THE PRESIDENT: That's interesting.

SECRETARY EVANS: Let me take your attention to Ana Cabral, she is
the President of the Hispanic Association for Corporate
Responsibility. And Ana and her association has obviously been working
on this important issue for quite some time. So why don't you give us
your thoughts on the importance of this.

MS. CABRAL: Thank you, Secretary Evans. I want to say that I
really applaud you, Mr. President, and you, Mr. Grasso, for what you
have done thus far.

I think in terms of restoring confidence in the marketplace, we
have been looking at issues of corporate responsibility for some time
and we define it fairly broadly. We look at not just a company's
governance, but also its efforts in the area of employment and how it's
interacting with its employees, what it looks like with regard to
procurement and small business opportunities that it creates.

And also in the way that it gives back to communities -- those that
it does business in and those that it has an obligation to. And we're
certainly concerned about the ability of the Hispanic community, which
is the largest minority community in the United States today, to
participate fully in the economic system that exists.

We know, for example, that the board rooms have been a place where
we have not really engaged significantly. And I think your leadership
at this point really could make a tremendous difference in terms of
really opening the doors. We're looking for outside directors who
have a diverse set of opinions, who are able to bring wonderful skill
sets, but understand that they are obligated to protect the
shareholders and, ultimately, the consumers.

I mean, we're looking at folk who understand the short and long
term balance and who can really enact that. And I think, you know,
together, I know Mr. Grasso and the New York Stock Exchange are looking
at ways to provide some training to individuals who might be able to
fill some of these vacant positions that may become available. We
would welcome the opportunity to try and help ensure that that pool of
talent is quite diverse and reflects America.

I think at the end of the day we're all served well if we can truly
create a quality, not just in the board room, but also across all
facets of the corporation.

THE PRESIDENT: Well, I appreciate that. I think one of the most
heartening statistics about Hispanic life in America is that fastest
growing segment of small business growth -- it's a different subject,
but along the same lines -- is the Hispanic owner. The Latino-owned
businesses in California, the creation there is just unbelievable. And
the same in my state of Texas, which is a really positive development.

In terms of large, corporate America, there's no question there has
to be a degree of sensitivity throughout the entire corporation in
order for it to realize value. In other words, value is not just in
numbers, value is in character, as well. And I really appreciate Ron's
point, that a company that has got a culture of responsibility is a
company that benefits financially, as well. It's kind of an
interesting analysis.

But thank you very much. I'm going to appreciate you coming.

SECRETARY EVANS: On Ana's left is Jill Gibson, and Jill is an MBA
student at Yale University. And the President talked earlier about,
you know, ethics being taught on the university campuses, or is it
absent from the university campuses. And I think it'd be interesting
to hear your thoughts on that subject.

MS. GIBSON: Thank you, Mr. Secretary and Mr. President. At the
Yale School of Management, we do talk about ethics in the classroom.
It's integrated into the curriculum in all of our courses.

One of the things which I do like is that we talk about ethics in
regards to our future as future business leaders and future managers,
and how we make sure that we integrate the corporate values within the
day to day practice of companies, making sure that we reward employees
based on their adherence to the company's values, not necessarily
simply based on their financial performance at the company. And so I
do see that as a positive benefit in business schools. I know I see it
at the Yale School of Management.

THE PRESIDENT: How about Dean Gordon, how's he doing?

MS. GIBSON: He's doing a great job, excellent Dean.

THE PRESIDENT: Tell him to give you an A. (Laughter.)

MS. GIBSON: I will. I'll make sure to tell him.

THE PRESIDENT: One of the things I hope to get corporate America
to do is to give people time off to mentor children, as part of
establishing a set of values within a corporation. One of the things
that I think is beginning to happen as corporate America looks at a
potential employee's willingness to help a neighbor in need as part of
whether or not that person will fit into the new corporate culture.

I think a lot of folks would say that it's impossible to develop a
culture within a large corporation; that after the entrepreneurial
stage of corporate development, you lose your soul. And one of the
interesting challenges for CEO America, as well as the business
schools, is how to instill a culture within a large kind of soul-less
organization. It's one thing to be Chick-fil-A, it's another thing to
have evolved to this, you know, conglomerate or a giant -- where the
ownership is dispersed to the point where people really wonder whether
or not it's possible. I happen to think it is, I think you can instill
a culture in any large organization. But one of the tricks is how to
do so.

And I believe one way to do so is for -- is to encourage employees,
as well as, you know, the people who run the company to do something
for somebody other than yourself. Part of that is to be a good
community participant and a good community citizen.

I'm glad you're here.

SECRETARY EVANS: Let me go to June Lennon, small business owner
and CPA, who has some thoughts on what has happened in the accounting
world over the last 12 months.

I do want to say that I have really appreciated hearing the
emphasis on moral responsibility and looking -- taking away from the
possible emphasis on the dollar and the financial gain. I think that
is very important.

We need to remember that there are already laws on the books that
address corporate fraud, and we need to be sure we are enforcing those
laws and not creating new bureaucracies and things that will actually
make it harder to do a good job for presenting the financial
information.

We need to be sure that we're being proactive and not reactive in
the situation that has happened. And I think several of the ways that
we can do that -- I appreciated Mr. James' comments that there is a
place that is actually incorporating the ethical issues into all the
courses. I think that's necessary and that's very proactive.

I think other ways to be proactive are to simplify the accounting
rules. And, Mr. Secretary, I appreciate your emphasis and your history
that you have -- that you are a proponent of simple accounting rules.

Another way is to simplify the tax laws do feed into this mess, and
I know a lot of people -- I have been trying for years to get the tax
code abolished. And people say, why are you, a CPA, doing that? I
said, because it's so I can help my businesses -- my clients grow their
business, instead of doing government paperwork for them.

But then the third thing is for government to lead by example.
Some of these reports that we hear of agencies who lose track of
equipment and agencies who can't balance their books are not much
better than the corporations who do the same or balance them wrongly.
So I think that would be a wonderful area, too, to give as much effort
to -- to showing that the government wants to be accountable and
responsible, too.

THE PRESIDENT: You ought to take a look at -- Franklin can tell
you, the government accounting system is pretty -- it's kind of hard to
explain. (Laughter.) I've been there for nearly 18 months trying to
figure it out. (Laughter.)

But thank you very much for that, June.

Listen, again, I want to repeat to you all -- I've got to bounce to
another seminar, but I do appreciate you coming. This is -- the other
thing that Americans have got to know is that, by far, the vast
majority of our fellow citizens are upright, honest, moral people. By
far, the vast majority of people running corporate America are good,
honorable people; good, decent people that care about their
shareholders, care about their employees, care about communities in
which they live. And that's important for people to know.

And that there have been some recently whose practices started a
while ago and are now coming to light, that cast a shadow on all of
us. And we've got to let the light shine in, and that's what we're
going to do.

But this is a unique land we're in. There is a moral compass
amongst by far the vast majority of us. And that's what makes America
so great. And our job is to -- my job is to capture that spirit, to
insist upon the best, call upon people to serve, hold people
accountable when they don't. There's no question we're in a rough
spot. But the good far outweighs the bad, not only in terms of
statistics but, most importantly, because of the people and the
character of the land.

I do want to thank you all again for sharing your thoughts. I
think this is a very important day. It's important for all of us here,
but more importantly, or as importantly, it's important for people who
are paying attention to what is said here.

So thanks for coming. I'll look forward to seeing you at lunch.
I'm impressed by the quality of the folks that have come. God bless
you all. Thank you. (Applause.)